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Moving markets: Five things shaping the FTSE 100 today

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Moving Markets Today: Asia Stocks Mirror Wall Street’s Decline, Most AI Stocks Tumble Including Microsoft, Alphabet, and AMD; China’s Factory Activity Contracts, Fed and BOE Meeting in Focus  

The tech-heavy Nasdaq saw a decline as investors awaited corporate earnings and the Federal Reserve’s meeting. AI-related firms, including Microsoft and Alphabet, lost $190 billion in market value due to disappointing quarterly results. China’s manufacturing activity contracted again in January, reflecting weak demand. Asian markets fell on Wednesday as investors awaited the Fed’s interest rate decision. Focus was on Fed Chair Jerome Powell’s post-meeting remarks for hints on future rate adjustments. Here are five key takeaways for your day. 

China’s Manufacturing Contracts Again in January as Demand Remains Weak 

China’s manufacturing sector experienced its fourth straight month of contraction in January, as revealed by an official factory survey released on Wednesday. The data indicates that the sector struggled to regain momentum at the onset of 2024. Despite a slight uptick in the official purchasing managers’ index (PMI) to 49.2 from December’s 49.0, the index remained below the crucial 50-mark, signifying contraction rather than growth. This snapshot provides an initial glimpse into the performance of the world’s second-largest economy at the beginning of the new year, following a somewhat uncertain recovery from the COVID-19 pandemic. 

Microsoft’s Post Record Revenue; Alphabet Ad Growth Falls Short 

Alphabet Inc and Microsoft Corp stocks declined in after-hours trading post their quarterly earnings reports. Advanced Micro’s first-quarter revenue forecast missed, causing a 6% drop, while Nvidia lost over 2% despite a January surge. Super Micro Computer also fell by 3%. Alphabet’s advertising growth missed expectations, leading to a 5.5% decline, overshadowing a strong quarter. Microsoft beat profit and revenue estimates due to new AI features but shares dropped 1% on rising development costs. 

British Businesses Kick Off 2024 with Highest Confidence in Two Years: Lloyds Survey 

British businesses entered 2024 with a notable surge in confidence levels, hitting their highest mark in almost two years. Despite aspirations to expand their staff, this optimism hasn’t translated into a significant acceleration in wage growth. The Lloyds Bank Business Barometer witnessed a remarkable nine-point increase to 44% this month, marking its strongest reading since February 2022, Reuters reported. This report is likely to be welcomed by the Bank of England as it prepares for its imminent interest rate decision. 

Market Focus: Fed and BOE Policy Decisions Take Centre Stage 

The Federal Open Markets Committee is gearing up to announce its decision on monetary policy later today. It’s widely anticipated that they will opt to maintain the key interest rate, known as the Fed funds target rate, within the range of 5.25% to 5.50%. Similarly, experts believe that the Bank of England will acknowledge the swift progress in reducing inflation this week but are unlikely to lower interest rates just yet. At its first meeting of 2024, the Bank’s Monetary Policy Committee is expected to keep rates steady at 5.25% for the fourth consecutive month. 

Moreover, there’s a series of eagerly awaited earnings reports from major tech and tech-related companies lined up. Qualcomm Inc is scheduled to report on Wednesday, followed by Apple Inc, Amazon.com, and Meta Platforms Inc on Thursday. Notable reports also include General Motors Inc on Tuesday, Boeing Co on Thursday, and Exxon Mobil Corp and Chevron Corp on Friday, wrapping up the week. 

Asian Stocks Set for Monthly Decline as China Weighs Down Markets 

The S&P 500 index saw a slight dip of 0.06%, ending the day at 4,924.97 points. Meanwhile, the Nasdaq Composite Index dropped by 0.76% to 15,509.90 points, whereas the Dow Jones Industrial Average showed a modest increase of 0.35%, reaching 38,467.31 points. In Asia, shares faced widespread declines. China’s CSI300 index dropped by 0.7% for the day and about 6% for January, marking its sixth straight monthly decline. Hong Kong’s Hang Seng Index fell by over 1%, primarily due to losses in property and tech sectors, on track for its worst January performance since 2016. Conversely, Japan’s Nikkei 225 seemed set to end the month with a gain of over 7%, its strongest January performance in over a decade. However, the index was down by 0.5% amid growing expectations for a change in the BOJ’s monetary policy.  

The two-year Treasury yield, a measure reflecting short-term interest rate expectations, rose to 4.3345%, climbing more than eight basis points for the month. In commodities, oil prices experienced a slight decline after gains in the previous session, amidst ongoing tensions in the Middle East. Brent futures dropped by 38 cents to $82.49 a barrel, while U.S. crude settled at $77.50 per barrel, losing 32 cents. Gold retraced from a two-week high, priced at $2,033.94 an ounce.

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